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The 5 Dumbest Things on Wall Street: Oct. 8

2. BP's Spill Flows All the Way to White House

BP (BP - Get Report) has spent months drowning in its own oil, and now the White House gets to bathe in it, too.

The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling laid out a damning case against the federal response to the BP oil spill, making it clear that the unquantifiable economic damage caused should hold a lien against the White House.

Indeed, the public has spent so much time hating BP -- and rightly so! -- that it's easy to forget the role the federal government played in botching the oil spill response effort. The Minerals Management Service was ushered out of existence as a result of its too cozy relationship with oil companies.

This week's report, however, shows that for every overly optimistic, if not outright misleading, comment from former BP CEO Tony Hayward and BP chief operating officer Doug Suttles, the federal government was in lock step in trying to make the problem seem like a minor environmental hiccup.

The ineptitude of the federal response wasn't just limited to its overly optimistic early assessment. It was also characterized by a sudden reversal of strategy. The federal government moved from downplaying the oil spill to launching the largest federal response in the nation's history. The American public heard Obama laud the government for the size of its response in countless speeches as his poll numbers slipped.

Now the national commission makes clear that Obama's massive response wasn't simply proportional to the magnitude of the oil spill crisis, but had an inverse relationship to this glass-half-full rhetoric. As the low-balling oil flow estimates became untenable, the federal government hoped the sheer number of resources committed to the Gulf of Mexico would save its image. Think of it as an environmental shock and awe campaign.

And if that's not enough, the national commission was given one final gift by the White House. Once the spill was under control, the federal government was back at the game of saying "no biggie," issuing a report once the well was capped that said that almost all of the oil that had once flowed across the surface of the Gulf of Mexico was either contained or eliminated.

TheStreet Says: The commission suggests that Obama was standing way too close to BP. And when you stand too close to millions of gallons of spewing oil, it tends to stick to your shoes.

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